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Under circumstances of heavily subsidized grid electricity, solar PV plainly cannot compete. The cost of electricity from a solar system in the Dominican Republic in the mid 1990s was estimated at almost US$1.9 per kWh,27 and $2.5 per kWh in Zimbabwe and Kenya,28 whereas the highest tariff in Table 3.2 is $0.16 per kWh and the lowest is $0.005 per kWh.

But we must remember that solar in rural areas of emerging markets is not competing with the grid. Given the choice, most rural customers would prefer a connection to the national electricity grid, especially if the electricity is reliable and subsidized. But the reality is that the electricity grid is simply not available to 1.64 billion people in the emerging markets. So instead of comparing the cost of solar with grid electricity prices, we need to compare it to the alternatives people are actually using in the absence of the grid.

After comparing it to a 650-watt gasoline generator set, the earlier critics of solar concluded that on a cost-per-kilowatt-hour basis it was still too expensive, and thus concluded that 'PVs are clearly not competitive with fossil fuel power' for rural electricity supply.

Table 3.3 Cost per kWh of solar and petrol genset in the Dominican Republic